2009-10-09

N.C. government leaders are asking Dell to repay tax breaks and other incentives the PC maker received from them when it built its PC plant four years ago. Dell has announced it is closing the manufacturing plant by January 2010, a move that will cost 905 employees their jobs. The shutdown is part of a larger initiative by Dell to save $4 billion through cost-cutting measures.

North Carolina leaders want Dell to pay for shutting down a four-year-old PC manufacturing plant in their state.

Dell officials announced Oct. 7 that they were closing the plant in Winston-Salem, N.C., by January 2010, a move that will cost 905 employees their jobs. The closing is part of a company-wide initiative designed to cut costs and save Dell about $4 billion.

It is the same plant that Dell built after state and local government leaders promised Dell more than $300 million in tax breaks and other incentives to come to North Carolina. States routinely offer such incentives to businesses in hopes of enticing them to locate there.

After a talk Oct. 8, N.C. Gov. Beverly Perdue told local reporters that she was determined to ensure that the state gets back “every red cent back that Dell has received."

City and Forsythe County officials also are looking to get repayment from the PC maker.

A Dell spokesman has said the company will meet state and local officials to talk about incentive agreements, and that Dell will honor those agreements.

Dell is looking not only to reduce expenses, but also to remake itself. The company is still the worlds second-largest PC vendor, behind Hewlett-Packard, but is feeling the pressure from other OEMs, such as Acer, in a market that has been severely hit by the global recession. Research firm Gartner in June said overall PC shipments would decline this year by 6 percent over 2008, with desktop sales dropping 16 percent.

PC makers are hoping to see a boost in shipments later this year and into next as businesses refresh their aging fleets of computers. They also expect Microsoft’s release of its Windows 7 operating system this month to fuel sales.

Dell also is looking to grow its services business, as illustrated by its anticipated $3 billion purchase of Perot Systems, announced in September.

Dell Inc. announced Thursday that it is closing its Edmonton call centre, a move that will affect more than 900 employees.

It's the second time in a week that computer company has announced cuts to operations in Canada. On Tuesday, Dell called off plans to create 1,200 new jobs in Ottawa and instead announced dozens of layoffs at a call centre in that city.It also comes less than three years after the city lured the call centre with economic concessions.

Employees at the Edmonton call centre were told Thursday that all operations will shut down by May, said Dell employee Ken Smuda, who has only been with the company for five months.

"It's unfortunate," he said. "I was looking forward to a nice long career with this company and now here I am one of the people who is back on the streets looking again."

Edmonton Mayor Stephen Mandel said company officials informed the city about the decision Thursday morning.

"We knew it was coming but we didn't think it was to the degree it was," Mandel said.

He said he was told Dell is shutting down, in part, because it's having trouble attracting and keeping staff in Edmonton's tight labour market.

"Their turnover was so high they couldn't keep people trained well enough to keep the level of service up," Mandel said.

The city lured the call centre to the city in 2005 with a 20-year agreement to waive property taxes on the company's southside call centre, concessions worth $1.1 million for the first five years.

The city may be able to recoup some of that money, said Kenn Bur, director of communications for Economic Development Edmonton.

"There a number of scenarios and we have referred that to our legal counsel," he said.

Headquartered in Round Rock, Texas, Dell is in the middle of consolidating its global operations and cutting its costs. The company's stated goal is to cut about 10 per cent of its workforce.

Somehow I doubt that North Carolina's job market is so hot that Dell can't recruit staff, but they ended up losing the Dell facility anyways.

Okay, can these continual stories teach anybody a lesson?

If a company wants to set up shop in your city, than welcome them with open arms and closed wallets.